Goulão, Catarina and Panaccione, Luca (2015) Pooling and redistribution with moral hazard. Economics Bulletin, 35 (1).

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Abstract

In this paper, we extend the framework of Dubey and Geanakoplos (2002) to the case 6 of moral hazard. Risk-averse consumers, who can in uence the likelihood of states of 7 nature by undertaking a hidden action, receive insurance by voluntarily participating 8 in a pool of promises of deliveries of future uncertain endowments. In exchange, they 9 gain the right to receive a share of the total return of the pool, in proportion to their 10 promises. We first analyze the equilibrium properties of the model and then illustrate 11 how an aggregate pool of promises of heterogenous consumers, differing in expected 12 endowment, results in a welfare improvement over the two segregated pools.

Item Type: Article
Language: English
Date: 2015
Refereed: Yes
Uncontrolled Keywords: moral hazard, pool of promises, heterogeneous consumers
JEL Classification: D3 - Distribution
D8 - Information, Knowledge, and Uncertainty
G2 - Financial Institutions and Services
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:45
Last Modified: 02 Apr 2021 15:49
OAI Identifier: oai:tse-fr.eu:27986
URI: https://publications.ut-capitole.fr/id/eprint/16508

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